Q1 2017 Production Results

RNS Number : 6858C

Polymetal International PLC

19 April 2017

 

Release time	IMMEDIATE
Date	19 April 2017

Polymetal International plc

Q1 2017 production results

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's production results for the first quarter ended March 31, 2017.

HIGHLIGHTS

·     Polymetal produced 280 Koz of gold equivalent (GE) in Q1 2017 which is an 8% increase over Q1 2016. A strong performance at Omolon and contributions from our newly acquired operations - Komar (Varvara) and Kapan added to the positive momentum in the period.

·     Gold production for the quarter increased 18% over 2016 to 199 Koz, while, as expected, silver production decreased 15% due to the anticipated grade decline at Dukat.

·     Gold and silver sales in the period lagged production due to the traditional shutdown of Russian refineries in January, and a seasonal increase of concentrate in transit from Dukat to off-takers. This working capital accumulation is expected to reverse by Q4 2017.

·     At Kyzyl, construction and pre-stripping activities are progressing in line with the project schedule. Kyzyl is on track to produce its first concentrate in Q3 2018.

·     The Сompany is pleased to report that the introduction of a new Critical Risks Management system is now complete, contributing to a material improvement in the Company's safety performance in Q1 2017 with LTIFR of 0.12, a 37% decrease compared to the prior year period, and no fatalities.

·     Net debt increased from US$ 1,329 million as at 31 December 2016 to US$ 1,506 million as at 31 March 2017, due to the lag between production and sales, seasonal advance purchases of diesel fuel, and increased spending at Kyzyl. As in prior years, free cash flow generation will be skewed towards the second half of the year, with input from Mayskoye concentrate sales and seasonal heap leach production at Svetloye.

·     The Company reconfirms its production guidance of 1.40 Moz of gold equivalent in FY2017 at total cash costs of US$ 600-650/ GE oz and all-in sustaining cash costs of US$ 775-825/GE oz. The cost guidance remains contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group's Rouble-denominated operating costs.

"We are pleased to report a strong start to the year with a solid set of production results that were further enhanced by our recently acquired assets", said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. "We remain on track to deliver on our production and cost targets for the current year".
 

	3 months ended Mar 31,		% change1
	2017	2016
Waste mined, Mt	25.5	13.7	+86%
Underground development, km	24.9	20.2	+24%
Ore mined, Kt	3,314	2,998	+11%
Open-pit	2,203	2,191	+1%
Underground	1,110	807	+38%
Ore processed, Kt	2,843	2,506	+13%
Production
Gold, Koz	199	169	+18%
Silver, Moz	6.1	7.2	-15%
Copper, Kt	0.5	0.2	+88%
Zinc, Kt	1.1	-	NA5
Gold equivalent, Koz2	280	260	+8%
Sales
Gold, Koz	176	162	+9%
Silver, Moz	4.6	6.5	-28%
Copper, Kt	0.1	-	NA
Zinc, Kt	0.5	-	NA
Revenue, US$m3	298	286	+4%
Net debt, US$m4	1,506	1,329	+13%
Safety6
LTIFR	0.12	0.19	-37%
Fatalities	-	-	NA
Notes:     (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.                 (2) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.                 (3) Calculated based on the unaudited consolidated management accounts. Concentrate sales are recorded based on forward prices for the expected dates of final settlement and concentrate revenue is presented net of refining and treatment charges. (4) Non-IFRS measure, based on unaudited consolidated management accounts. Net debt equals to current and non-current borrowings less cash and cash equivalents. Comparative information is presented for 31 December 2016.                 (5) NA = not available. (6) LTIFR =lost time injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

	3 months ended March 31,		% change1 (Y-o-Y)
	2017	2016
GOLD EQ. (KOZ) 2
Dukat	79	98	-20%
Albazino-Amursk	68	64	+7%
Omolon	51	29	+72%
Mayskoye	5	11	-51%
Varvara	29	14	+109%
Voro	26	28	-7%
Okhotsk	11	15	-26%
Kapan	10	-	+100%
TOTAL	280	260	+8%

Notes:     (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.

                (2) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Wednesday, 19 April, 14:00 London time (16:00 Moscow time).

To participate in the call, please dial:

8 10 800 204 140 11 access code 85704505# (free from Russia), or

[phone] (free from the UK), or

[phone] (free from the US), or

any of the above numbers (from outside the UK, the US and Russia) or follow the link:

http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4483.

Please be prepared to introduce yourself to the moderator or register.

Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4483. A recording of the call will be available immediately after the call at [phone] (from within the UK), 1 877 6423 018 (USA Toll Free) and [phone] (from within Russia), access code 307897#, from 14:00 London time (16:00 Moscow time) Wednesday, April 19, till 14:00 London time (16:00 Moscow time) Wednesday, April 26, 2017.

Enquiries

Media		Investor Relations
FTI Consulting Leonid Fink Jenny Payne	[phone]	Polymetal Evgenia Onuschenko Maryana Nesis MichaelVasiliev	[e-mail] [phone] (UK) [phone] (Russia)
Joint Corporate Brokers
Morgan Stanley Sam McLennan Richard Brown Panmure Gordon Adam James Tom Salvesen	[phone] [phone]	RBC Europe Limited Tristan Lovegrove Marcus Jackson	[phone]

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED

DUKAT OPERATIONS

	3 months ended Mar 31,		% change
	2017	2016
MINING
Dukat
Underground development, m	8,012	8,575	-7%
Ore mined (underground), Kt	399	420	-5%
Goltsovoye
Underground development, m	1,387	1,754	-21%
Ore mined (underground), Kt	45	48	-5%
Perevalnoye
Underground development, m	502	-	+100%
Lunnoye + Arylakh
Underground development, m	1,648	1,103	+49%
Ore mined (underground), Kt	144	108	+34%
TOTAL HUB
Underground development, m	11,549	11,432	+1%
Ore mined (underground), Kt	588	575	+2%
PROCESSING
Dukat
Ore processed, Kt	476	498	-4%
Grade
Gold, g/t	0.5	0.5	-14%
Silver, g/t	329	380	-13%
Recovery1
Gold	83.6%	85.8%	-3%
Silver	87.6%	85.2%	+3%
Production
Gold, Koz	5.6	7.3	-24%
Silver, Moz	4.3	5.3	-19%
Lunnoye
Ore processed, Kt	113	110	+3%
Grade
Gold, g/t	1.3	1.8	-27%
Silver, g/t	381	494	-23%
Recovery1
Gold	91.9%	92.6%	-1%
Silver	92.5%	92.5%	-0%
Production
Gold, Koz	4.3	5.7	-25%
Silver, Moz	1.3	1.6	-20%
TOTAL PRODUCTION
Gold, Koz	9.8	13.0	-24%
Silver, Moz	5.5	6.8	-19%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate)

Q1 silver production at Dukat decreased 24% year-on-year to 5.5 Moz due to anticipated grade decline. The Goltsovoye mine is starting to wind down and the share of lower-grade feed from Lunnoye at the Omsukchan concentrator is increasing. The concentrator continues to operate significantly above nameplate throughput capacity and demonstrated a meaningful improvement in the silver recovery rate.

At Lunnoye, ore mined volumes increased by 34% year-on-year as the new Zone 5 vein was brought into production. Gold and silver production declined 25% and 20% respectively, as higher-grade tonnage from the Zone 7 vein has declined significantly.

At Perevalnoye, one of Dukat's satellite deposits, underground development has commenced with first ore expected in Q4 2017.
 

ALBAZINO-AMURSK	3 months ended Mar 31,		% change
	2017	2016
MINING
Waste mined, Kt	4,401	4,094	+7%
Underground development, m	1,587	1,419	+12%
Ore mined, Kt	482	452	+7%
Open-pit	406	388	+5%
Underground	76	63	+20%
PROCESSING
Albazino concentrator
Ore processed, Kt	417	400	+4%
Gold head grade, g/t	4.7	4.9	-5%
Gold recovery1	86.3%	85.6%	+1%
Concentrate produced, Kt	35.3	33.0	+7%
Concentrate gold grade, g/t	48.6	52.0	-7%
Gold in concentrate, Koz2	55.1	55.1	-0%
Amursk POX
Concentrate processed, Kt	43.1	40.1	+8%
Gold head grade, g/t	53.0	51.0	+4%
Recovery	96.1%	94.1%	+2%
Gold produced, Koz3	68.3	64.1	+7%
TOTAL PRODUCTION
Gold, Koz3	68.3	64.1	+7%

Notes:     (1) To concentrate

(2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production upon completion of downstream processing at the Amursk POX

(3) Q1 2016 now includes gold produced from the third-party concentrate, previously accounted in Mayskoye production

At Albazino-Amursk, gold production in the first quarter of 2017 increased 7% over 2016, mainly driven by higher recoveries and the re-introduction of 3^rd party concentrate to the feed at Amursk.

The moderate grade decline at Albazino was offset by increased throughput and improved recoveries at the concentrator, resulting in flat gold in concentrate production. Underground mine productivity and dilution control continues to improve resulting in an increase in underground ore mined both year-on-year and quarter-on-quarter.

The POX debottlenecking project is on schedule with earthworks and concrete foundations for the oxygen plant now complete. In addition, the water treatment section has been fully debottlenecked, resulting in improved recovery levels. Polymetal plans to ramp up the debottlenecked POX plant to its full expanded capacity in the second half of 2018, in time to take feed from the Kyzyl concentrator.

A 7-week shutdown commenced on April 6th and will incorporate, among regular maintenance, partial vessel re-lining and the completion of necessary adjustments for the debottlenecking project.  

OMOLON OPERATIONS

	3 months ended Mar 31,		% change
	2017	2016
MINING
Sopka
Waste mined, Kt	427	-	NA
Tsokol
Underground development, m	905	915	-1%
Ore mined (underground), Kt	35	6	+493%
Birkachan
Waste mined, Kt	-	396	-100%
Underground development, m	1,146	-	NA
Ore mined, Kt	27	302	-91%
Open-pit	-	302	-100%
Underground	27	-	NA
Oroch
Waste mined, Kt	109	1,446	-92%
Ore mined (open pit), Kt	81	217	-62%
Olcha
Waste mined, Kt	184	-	NA
Underground development, m	506	-	NA
Ore mined (open pit), Kt	73	-	NA
TOTAL HUB
Waste mined, Kt	719	1,842	-61%
Underground development, m	2,557	915	+179%
Ore mined, Kt	216	525	-59%
Open-pit	154	519	-70%
Underground	62	6	NM
PROCESSING
Kubaka Mill
Ore processed, Kt	215	205	+5%
Grade
Gold, g/t	7.3	4.8	+54%
Silver, g/t	22	27	-19%
Recovery1
Gold	93.7%	93.3%	+0%
Silver	78.7%	78.1%	+1%
Gold production, Koz	49.0	28.3	+73%
Silver production, Moz	0.1	0.1	+43%
TOTAL PRODUCTION
Gold, Koz	49.0	28.3	+73%
Silver, Moz	0.1	0.1	+43%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory

Omolon has delivered a strong set of results in the first quarter of 2017 with gold production jumping by 73% year-on-year. The gold grade in ore processed increased 54% compared to 2016 on the back of higher-grade ore from the new Olcha open pit, as well as Tsokol and Birkachan underground mines.

Open-pit mining at Olcha and Oroch has been completed, with equipment and personnel relocated to Sopka where the open pit is anticipated to deliver first ore in Q4 2017. In the meantime, underground development started at Olcha where first ore is expected in Q4 2017.

MAYSKOYE

	3 months ended Mar 31,		% change
	2017	2016
MINING
Waste mined, Kt	1,018	-	+100%
Underground development, m	4,608	5,328	-14%
Ore mined, Kt	254	121	+110%
Open-pit	23	-	+100%
Underground	231	121	+91%
PROCESSING
Ore processed, Kt	207	148	+39%
Gold grade, g/t	6.2	6.2	+0%
Gold recovery1	87.1%	87.6%	-1%
Concentrate produced, Kt	18.6	15.3	+21%
Concentrate gold grade, g/t	60.4	53.5	+13%
Gold in concentrate, Koz2	36.1	26.3	+37%
Amursk POX
Concentrate processed, Kt	4.2	5.8	-27%
Gold grade, g/t	48.6	57.6	-16%
Recovery	96.1%	94.1%	+2%
Gold produced, Koz	5.2	10.6	-51%
TOTAL PRODUCTION
Gold, Koz	5.2	10.6	-51%

Notes:     (1) To concentrate

(2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production upon sale to off-taker or internal downstream processing to saleable metal product.

(3) Q1 2016 now excludes gold produced from the third-party concentrate, which is accounted in Albazino/Amursk production

At Mayskoye, gold production in Q1 2017 totalled 5.2 Koz, a 51% drop from the prior year period as most of Mayskoye concentrate is stockpiled in the port of Pevek for third-party off-takers, and Amursk POX capacity is taken up by third-party material.

The new underground mining method (sublevel open stoping with backfill) at Mayskoye continues to make good progress as the total amount of ore mined during the quarter grew 110% to 254 Kt year-on-year and 12% compared to Q4 2016.

The improvement in mining led to increased processing volumes at the concentrator, up 39% compared to the previous year. Gold grades remained flat year-on-year at 6.2 g/t and increased 15% over Q4 2016. The focus remains on achieving rapid backfill to ensure lower dilution from secondary stopes and to enable reduced primary stope length.

The Company has made meaningful progress on the project to extract crown pillars at Zones 1 and 2 by open-pit mining. First ore from the open pit was mined in Q1 2017 and the leaching circuit is scheduled to start processing ore in Q3 2017. The crown pillar project is planned to result in materially higher production at Mayskoye in 2017 on the back of higher grades in the open pit.

VARVARA

	3 months ended Mar 31,		% change
	2017	2016
MINING
Varvara
Waste mined, Kt	3,677	4,888	-25%
Ore mined (open pit), Kt	502	659	-24%
-     float ore	139	4	NM
-     leach ore	363	655	-45%
Komarovskoye
Waste mined, Kt	2,304	-	NA
Ore mined (open pit), Kt	433	-	NA
TOTAL HUB
Waste mined, Kt	5,981	4,888	+22%
Ore mined (open pit), Kt	935	659	+42%
PROCESSING
Flotation
Ore processed, Kt	57	123	-54%
Grade
Gold, g/t	1.9	1.0	+85%
Copper	0.56%	0.31%	+80%
Recovery1
Gold	61.0%	57.6%	+6%
Copper	76.1%	67.5%	+13%
Production
Gold (in concentrate), Koz	1.6	1.6	-3%
Copper (in concentrate), Kt	0.2	0.2	-13%
Toll-treated ore processed, Kt2	11	-	+100%
Leaching
Ore processed, Kt	738	626	+18%
Gold grade, g/t	1.4	0.7	+92%
Gold recovery1	82.1%	72.6%	+13%
Gold production, Koz	26.1	10.9	+140%
Total ore processed, Kt	805	749	+8%
TOTAL PRODUCTION
Gold, Koz	27.6	12.5	+121%
Copper, Kt	0.2	0.2	-13%

Note:       (1) Technological recovery, includes gold and copper within work-in-progress inventory

(2) To be further processed at Amursk POX.

In the first quarter, Varvara delivered a 121% increase in gold production over the previous year. A strong improvement in grades and recovery levels in the leaching circuit was enabled by the quick ramp-up in ore railed from Komar. The successful streamlining of ore logistics from Komar to the Varvara processing plant prompted the decision to shift more mining and processing volumes from Varvara to Komar.

The results of significant in-fill and step-out drilling at Komar together with the updated cost estimates based on recent performance, will form the foundation for the re-assessment of Komar mineral resources and ore reserves. The updated estimate is expected to be completed in Q4 2017.

In the period, Varvara toll-treated some of the refractory gold ore bought by Polymetal in Russia. The produced gold concentrate will then be processed at the Amursk POX facility. Gold production from this material will be booked following dore production from concentrate at Amursk.

VORO

	3 months ended Mar 31,		% change
	2017	2016
MINING
Voro
Waste mined, Kt	2,519	2,651	-5%
Ore mined (open pit), Kt	420	305	+38%
-     primary	367	291	+26%
-     oxidised	53	14	+295%
PROCESSING
Voro Heap Leach
Ore stacked, Kt	-	-	NA
Gold grade, g/t	-	-	NA
Gold production, Koz	2.5	2.9	-12%
Voro CIP
Ore processed, Kt	247	245	+1%
Gold grade, g/t	3.6	4.3	-18%
Gold recovery1	80.0%	78.7%	+2%
Gold production, Koz	23.3	24.9	-6%
TOTAL PRODUCTION
Gold, Koz	25.9	27.8	-7%

Note:       (1) Technological recovery, includes gold within work-in-progress inventory 

Gold production at Voro in Q1 2017 decreased 7% year-on-year, due to a scheduled grade decline at the CIP processing plant. Ore stacking for the heap leach operation is expected to commence in Q2 2017.

Ore mining at Voro increased by 38% year-on-year to 420 Kt, and continues to be focused on primary ore as oxidised ore reserves are nearing depletion.

OKHOTSK OPERATIONS

	3 months ended Mar 31,		% change
	2017	2016
MINING
Avlayakan
Underground development, m	1,244	1,072	+16%
Ore mined (underground), Kt	39	42	-6%
Svetloye
Waste mined, Kt	189	269	-30%
Ore mined (open pit), Kt	264	320	-17%
TOTAL HUB
Waste mined, Kt	189	269	-30%
Underground development, m	1,244	1,072	+16%
Ore mined, Kt	303	361	-16%
Open-pit	264	320	-17%
Underground	39	42	-6%
PROCESSING
Khakanja
Ore processed, Kt	153	152	+1%
Grade
Gold, g/t	1.3	2.6	-49%
Silver, g/t	100	69	+44%
Recovery1
Gold	96.9%	94.9%	+2%
Silver	73.9%	74.7%	-1%
Gold production, Koz	7.0	12.3	-43%
Silver production, Moz	0.3	0.2	+39%
Svetloye Heap Leach
Ore stacked, Kt	96	-	NA
Gold grade, g/t	3.8	-	NA
TOTAL PRODUCTION
Gold, Koz	7.0	12.3	-43%
Silver, Moz	0.3	0.2	+39%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)

At Okhotsk, gold production in the first quarter decreased by 43% year-on-year due to anticipated grade decline processed from the historic ore stockpiles. Silver production grew 39% to 0.3 Moz, as 3^rd-party ore with higher silver grades was introduced to the feed.

Svetloye seasonal heap leach operation is anticipated to resume in Q2 2017 and deliver substantial gold production in H2 2017.

Avlayakan's life-of-mine has been extended to H2 2018 with further positive down-dip exploration results received in the quarter.

KAPAN

	3 months ended Mar 31,		% change
	2017	2016
MINING
Underground development, m	3,368	-	NA
Ore mined (underground), Kt	115	-	NA
PROCESSING
Ore processed, Kt	115	-	NA
Grade
Gold, g/t	2.1	-	NA
Silver, g/t	43.0		NA
Copper, %	0.27%	-	NA
Zinc, %	1.33%		NA
Recovery
Gold	83.1%	-	NA
Silver	83.0%		NA
Copper	90.9%	-	NA
Zinc	88.3%		NA
TOTAL PRODUCTION
Gold, Koz	5.8	-	NA
Silver, Moz	0.1	-	NA
Copper, Kt	0.3		NA
Zinc, Kt	1.1	-	NA

In Q1 2017, Kapan achieved an important milestone by mining the highest monthly ore tonnage in more than 10 years, reflecting the ongoing improvement measures to debottleneck the underground mine.

Quarterly gold production at Kapan increased 52% to 5.8 Koz, with higher ore volumes processed and substantially improved grades of 2.1 g/t, up 31% quarter-on-quarter.

In the meantime, in-fill and step-out drilling is underway at Lichkvaz, a satellite deposit that is expected to provide additional tonnage to the existing concentrator.

We remain on track to producing a JORC-compliant reserve estimate and a combined LOM for Kapan and Lichkvaz in Q3 2017.

KYZYL

	3 months ended Mar 31,		% change
	2017	2016
MINING
Waste mined, Kt	10,698	-	NA

In Q1 2017, a record amount of waste was mined at Kyzyl. Mining activities are on schedule and continue to focus on pre-stripping.

The processing plant building is now fully enclosed and winterized, with foundation works for processing equipment currently underway. Project development remains on schedule, with the mill foundations 50% complete and construction activities focused on site infrastructure. Engineering and design has been finalised. The boiler houses for the village and the plant have been commissioned.

Dams for the tailings storage facility have been completed. Installation of water isolation will commence after the arrival of consistent above-zero temperatures.

OTHER DEVELOPMENTS

At Prognoz, in which Polymetal acquired a 5% indirect interest on January 19, the winter road has been completed and drilling activities are currently underway.

At Nezhda, following an extensive exploration campaign in 2016, we expect to produce an initial JORC reserve and resource estimate at Nezhda's Zone 1 in 2017. In-fill drilling and geomechanical studies are currently underway.

HEALTH AND SAFETY

Polymetal is pleased to report that in the first quarter of 2017, we decreased LTIFR by 37% to 0.12 compared to 0.19 in the prior year period. This improvement is largely attributable to the newly introduced Critical Risks Management System that is expected to decrease risk to the health and safety of our employees,

In the course of 2017, we will continue moving towards our overarching goal of eliminating accidents and fatalities at all of our operations.

 

END

 

 

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